Financial Crime World

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Indonesia Recognized for Effective Money Laundering and Terrorism Financing Prevention

In a significant achievement, Indonesia has been recognized by the Asia-Pacific Group (APG) for its effective implementation of international standards in preventing and eradicating criminal acts of money laundering and financing of terrorism. The APG Annual Session held in Kathmandu, Nepal, concluded that Indonesia’s compliance with 40 FATF recommendations is considered very adequate.

Compliance Report

According to the APG Mutual Evaluation Report (MER), Indonesia received a “C” rating for six recommendations, indicating full compliance. Twenty-nine recommendations were rated as “Largely Compliant”, while four were partially compliant. Only one recommendation related to funding for the proliferation of weapons of mass destruction received a “Non-Compliant” rating.

Effectiveness

In terms of effectiveness, Indonesia was found to have implemented five Immediate Outcomes (IO) with substantial effect, five IO with moderate effect, and one IO with low effect. This assessment indicates that Indonesia’s implementation is better than that of APG countries such as Australia, Malaysia, and Singapore.

FATF Full Membership Roadmap

Indonesia is now working towards becoming a full member of the Financial Action Task Force on Money Laundering (FATF), an inter-governmental organization that sets global standards for combating money laundering, terrorist financing, and weapons of mass destruction proliferation. Becoming a FATF full member will provide Indonesia with several benefits, including acceleration in being recognized as having high financial system integrity, improved economic development prospects, and leadership opportunities in setting international AML/CFT standards.

Bank Indonesia’s Strategy

To support the government’s efforts to become a FATF full member, Bank Indonesia has prepared three strategies:

  • Fulfill all FATF recommendations for payment systems and foreign exchange business activities.
  • Implement risk-based approaches in supervision and monitoring.
  • Increase public awareness and institutional cooperation in preventing money laundering, terrorism financing, and weapons of mass destruction proliferation.

APG MER Report

The APG MER report is available for download at [link].

BI’s Strategy

Bank Indonesia has prepared a roadmap to support Indonesia’s bid for FATF full membership. The bank’s strategy involves:

  • Fulfilling all FATF recommendations for payment systems and foreign exchange business activities.
  • Implementing risk-based approaches in supervision and monitoring.
  • Increasing public awareness and institutional cooperation.

Implementation

In terms of implementation, Bank Indonesia has issued provisions and guidelines on the AML/CFT program for non-bank payment system service providers (PJSP) and non-bank money changers (KUPVA BB). It has also prepared a sectoral risk assessment (SRA) and risk-based approach (RBA) guidelines for PJSP SB & KUPVA BB, as well as contributed to the preparation of a national risk assessment (NRA), regional risk assessment (RRA) on corruption, and SRA virtual.

Participants

Representatives from the United States, Canada, Macao-China, China-Taipei, Pakistan, Bangladesh, and the APG Secretariat attended the APG Annual Session in Kathmandu, Nepal.